How Music-Encoding Service Murfie Skirts Legal Muddles and Why Its CEO Thinks Ownership Still Rules

In the second part of my interview with Murfie CEO Matt Younkle, we cover encoding specifics, questions of legal ownership in a digital-only world and the threat from subscription-based streaming giants like Spotify.

In a world of totally free lossless music CD encoding tools and more than ample, high-speed external storage, paying to outsource the transfiguration of your physical music library may sound a little backwards. But media marketplace Murfie, which can turn your CD library into an online media wellspring and source of cash to buy additional tunes from an online store, aims to be more than just a stopgap for digital neophytes with troves of unripped discs.

In the second part of my interview with Murfie CEO Matt Younkle (you can read part one here), we cover the service’s encoding specifics for audiophiles, questions of legal ownership in a digital-only world and the threat from subscription-based streaming giants like Spotify.

You’d think that in 2013, services like iTunes and Amazon would have at least shifted fully to lossless audio downloads, and yet virtually no one sells or streams lossless quality digital music at this point.

That was my main thing that pulled me into Murfie. I was still picking up CDs, and so I’d buy them, then rip them and I’d wind up with this piece of plastic, and it was great because I owned it, but it wasn’t about the plastic for me, it was about knowing that I had the bit-for-bit version of the studio recording.

I think it was Peter Gabriel who was talking about this at some point after his album Up came out, where he said the greatest challenge facing musicians today is that they have far less control nowadays over the type of listening experience someone’s going to have because you can’t predict how someone’s going to rip something. I’ve used stuff like Exact Audio Copy or XLD over the years, I turn on all the secure rip settings, check against AccurateRip, do a test rip before each actual rip to guarantee it’s a perfect rip and so forth. How does Murfie’s extraction process work? How do Murfie subscribers know you’ve done a perfect rip?

We use dbPowerAmp and we rely after our first pass pretty heavily on AccurateRip, which is sort of the CRC [cyclic redundancy check]. We’re pretty picky about the drives we use, too. There are certain drives that do a much better job of bit-for-bit extraction of audio CD data. There’s actually a database that tracks this on the AccurateRip website. So we go through a lot of pains to source our hardware.

So we do the rip, we apply the offsets to the drive because every drive model has its own little spot where it starts its initial read on the disc. Then we apply the CRC, feed that into the AccurateRip database and it’s either a match or it’s not. If it’s a match, which is the case most of the time, you’ve ensured it’s an accurate rip. If it’s not, then we go back in and attempt to perform a secure rip of the content, secure rip meaning we’ll go back and look at the part where…it’s a multiple read process, where we’re reading each track multiple times looking for differences between each read. If there’s a scratch or imperfection, usually it’s going to be reading differently or throwing some kind of error value so we’re able to zero in on the problem part of the disc. If multiple successive reads are able to produce agreement about what the data is, then we’re in good shape and consider that to be an accurate read of that disc.

If we can’t accomplish that, then we consider the disc to be an inaccurate read, so even though it might sound indiscernible from an accurate read, that particular disc is locked into the collection of the Murfie member, meaning it’s not eligible to be sold or traded in the online store.

How do you convey any of this back to the Murfie user? How do they see what you’ve done?

All of this stuff shows up in the metadata for each track if you’re pulling down the FLAC data. If you download MP3s from Murfie and we’re transcoding the original FLACs to MP3s, some of the original metadata gets changed around. But if you go back to the original lossless data, we’re storing the AccurateRip ID, drive information, you know, all that stuff is encoded in the metadata if you really want to know.

We’re even storing things like the information that’d allow you to exactly recreate the CD, like the table of contents and some other things. We had a user who wanted know, if push came to shove, would he have enough information to be able to recreate identically the CD, so we have that as well. And if there’s ever a discrepancy, we still have the physical disc here, so we wouldn’t hesitate if someone has a question to go back in and do another rip.

What if I’ve digitized a CD, made a perfect AccurateRip copy, but I trashed the original CD at some point? Can I send my lossless digital files to Murfie for inclusion in my library?

Today we’re very much focused on the physical media side, so if you’re buying music off Murfie it’s ultimately based off a physical object someone sent us.

We’re in the process of building out a locker, where you can upload content, but for uploaded content, none of it would be marketplace eligible. At this point we’re only allowing stuff into the marketplace that we can verify as provably purchased commercial copies of music. Short of other more interesting licensing arrangements, we’re looking ahead five years, 10 years, 20 years out, as CDs sort of fade away, that there still needs to be a pathway to own music in the future and we’re starting to put feelers out around what we call a physical equivalent license, which would grant you the same rights of ownership in digital and give you the same rights to transfer that to an actual CD copy of the content.

But that’s stepping ahead. In the case of FLAC-only music, once we’ve got our uploadable locker available you would be able to put it up, then stream and download and sync it with your devices, but you wouldn’t be able to sell or trade it.

How do you indemnify yourself against users who, say, keep digital copies of the CDs they’ve sent you? CDs they might digitize and use to sell or trade through your online store? It’s not possible to prevent someone from gaming the system, is it?

We’ll be sharing revenues with the rights holders for the content that gets uploaded, so like an iTunes Match, where you could have downloaded your entire collection from Napster and you subscribe to iTunes Match and your Napster collection now gets matched to master copies provided by the major record labels. That’s how we cover our bases with respect to uploading content that you might not have purchased in the first place.

What about a cloud music service like ReDigi, which lets you take your pre-owned iTunes music and use it like currency in a virtual store? They’re currently embroiled in what may turn out to be a landmark case in terms of defining whether the digital tunes on your hard drive are the same, ownership-wise, as the ones on a CD.

ReDigi is interesting. We’ve been following what they’ve been doing really closely because they’re basically asserting that the license you agree to when you download your iTunes stuff really doesn’t apply, that digital files are actual property that’s subject to the First Sale Doctrine, meaning they can be resold. It would be really cool if they won their case, but I think they have an uphill battle there. I mean clearly they’ll have an uphill battle going against Capitol Records, and should they win in the early rounds this one will be appealed all the way up.

So we’re following ReDigi closely, but today we already have a way to maintain ownership of our music via CD, and we have the right, which is well-established, to sell or trade CDs. The First Sale Doctrine applies there. And there’s also an established right to rip a CD to make a copy for personal use, which is why all these ripping technologies are built into applications like iTunes and Windows Media Player and everything else that’s out there. So what we do at Murfie is kind of combine those two. In a way, we’re combining a ripping service with a store. You can access it via downloads and streaming, but if you wanted to withdraw your collection you could. We have a one-to-one match of everything that’s on our site that we would send back to you.

It’s hard to imagine a failsafe system for preventing piracy, but then a guy like Neil Young takes the stance that piracy is the new radio.

I look at Spotify and what they’ve done. They’ve done more than anything to take a bite out of folks that otherwise would have downloaded music for free. They’ve been growing their subscriber base, but I think the bigger thing they’ve done, because they have the ad-supported free service, is, folks who’d otherwise have gone through the trouble to find and download something are just saying “I’ll put up with the ads to have access to all this stuff.” I think that’s been the biggest competition in a long time for illegal downloads.

Speaking of, how does Murfie compete with something like Spotify in the long run?

It’s really a rental versus ownership question. I can make a lot of great arguments that hey, everybody should just rent a house and not really buy a house, or you can make equally great arguments that house ownership is essential. Our take at Murfie is that, moving forward, there will always be a large group of people that want to own their music, not just rent it. I mean music as part of your culture. I think you should be able to own your culture, not just rent your culture.

Knowing the way the industry works, it’s going to be difficult to have a truly comprehensive collection on Spotify, so I guess I come back to the idea that, you know, if you’re a collector, if you care about your music, you want to own it, you want to have a collection that’s yours and not subject to a rental model. That’s where Murfie’s coming from.

If you look at the market and what people purchased last year in the U.S., there were 78 million people that purchased CDs in 2011, there were 45 million people that purchased licensed downloads and there were about a million-and-a-half to two million people who subscribed to some sort of streaming service. So predominantly the ownership models is the sticky model, even though the rental models are catching on and I think will ultimately rival some of the ownership models.